MUST READ...APT! Important!
I was asked a question in a pm and am posting it to the board because it is critical to know these answers going forward for us to move ahead...
Can you explain this to me... something I dont understand on the IR deal. How does IR make money by driving the pps down by diluting shares? Wouldnt they want the pps to go up and then sell? I know they can get more shares if they can get a low 5 day avg pps, so does that mean they dump the initial shares they are given to get the pps down so they are awarded more shares, and then drive the pps up before dumping the additional shares?
Here is my response...
I don't fully understand it but here is what I know (or think I know)
IR was awarded shares for debt.. They almost always start to sell the majority of those shares as soon as they get them to recover their investment. There is a calculation built in (I roughly know the formula but not exactly) When they are dumping the shares, if the pps goes low enough that they can't get an opportunity to get their "full" "contracted" "promised" returns, then they will be issued more shares to cover the balance until they are made whole. This, to my understanding has a window in which IR has to sellout and re-coop their investment and I think that period is an average of the pps for 5 trading days. So if the pps average over the five days is within the range that IR could have been fully made whole and they didn't take advantage of it, then APT is off the hook. If the pps average is too low, then they are on the hook to issue more shares.
What I don't know is when this 5 day period started and what the average pps was and if it held at a rate that IR could have been made whole. This needs to be made clear to share holders to see what is the current status of this situation. We need to know if the debt is fully paid, partially paid, what was the target range of the pps to satisfy the IR debt and what is the current status of this situation. They owe us that much.
In the interview yesterday, they kept mentioning that the short term debt was paid and now they could move on but it doesn't tell us if IR is finished with the dilution or not. It may be cleared from the company's position but it is a big deal if IR is still holding a significant amount of shares and what they plan to do with them. Note: IR states that they still have shares from "every" deal of this sort that they have entered in to. So that cloud is always hanging there.. We need to know what percentage are they willing to retain here because it seems people are still afraid of dilution. Everyone is speculating but no one actually knows the actual facts of the situation but the parties privy to that sort of information.
For us as investors, we should collectively demand to know the status of this situation. It is critical to whether or not we choose to invest going forward.
If you are so inclined copy and paste the meat of this post and send an email to pknopick@eandecommunications.com and demand that we be fully updated on this issue.. His name is Paul and he is the APT investor relations guy.. All his mail is cc'd to William Maher and other management I was told btw..so they will see it.. There is strength in numbers..
Go APT!
